April 12, 2017
HARRISBURG — A plan proposed by state House Speaker Mike Turzai, R-Allegheny County, would allow shoppers to buy their wine where they get their pasta and sauce — in the normal grocery aisles instead of a segregated cafe area of the store.
The measure is part of a series of new privatization bills House Republicans have rolled out to further dismantle Pennsylvania’s government-run liquor system. Other measures would allow grocers to sell spirits as well as beer and wine, and a separate bill would allow privately run liquor stores.
There are about 220 grocery and convenience stores in Pennsylvania selling wine and beer in cafe settings. Pennsylvania has about 600 state-run liquor stores.
Turzai’s bill would allow any grocery store to sell wine in the main store area by paying the state a $250,000 application fee per store.
The House Liquor Control Committee has scheduled a vote on the measure for Tuesday.
There is no accompanying plan to allow grocers to shift beer into the main shopping area, said Turzai’s spokesman Stephen Miskin.
The move to relax the rules for wine sales in stores is part of a bill that would also privatize the wholesale distribution of wine in Pennsylvania. With the state’s existing network of beer distributors and restaurant license-holders that sell beer to the public, there is an established system in place, Miskin said.
“Beer is already in private hands,” he said.
Pennsylvania’s liquor laws, updated last year, allow grocery stores and convenience stores to sell beer and wine by opening in-store cafes and using restaurant licenses. But in much of Pennsylvania, those licenses are hard to find, said David McCorkle, president and chief executive officer of the Pennsylvania Food Merchants Association.
About half of those licenses for grocery stores and convenience stores have been acquired by a handful of chains: Giant, Giant Eagle, Sheetz and Weis Markets, he said.
The state has been slowly auctioning off expired licenses to relieve some of the pressure. In the coming years, those auctions will add another 1,000 locations selling beer and wine, even if the latest push for liquor privatization stalls, McCorkle said.
But the prices commanded at those auctions has varied dramatically across the state. Licenses in fast growing areas command far higher prices than those in other parts of the state, McCorkle said. Last month, Giant paid $463,000 for a license to sell beer and wine in a store in Montgomery County, according to the Liquor Control Board. The grocery chain paid $156,000 for a license for its store in Snyder County.
Sheetz paid just $25,001 for a license to sell beer and wine at a convenience store in Cambria County and $55,000 for a license in Crawford County.
Even if the state creates the option for grocers to put wine in the main shopping area, there will likely be high demand for the old restaurant licenses because markets will want to be able to offer beer and wine sales, he said.
His group supports Turzai’s legislation because the stores are eager for changes that increase the number of licenses for liquor sales. Turzai’s bill would also triple the amount of wine a shopper can buy at one time. Shoppers can now only buy up to three liters of wine at a time.
Pennsylvania's limits on the quantity of wine or beer that can be purchased per sale annoy both shoppers and the store operators, McCorkle said.
McCorkle said there is research suggesting Pennsylvania needs to rethink how it sells its wine and spirits.
National Institute of Health data suggests that Pennsylvanians drink more beer per capita than people in other Northeastern states. Pennsylvanians drink less wine and spirits per capita than people in the region, though.
McCorkle said he believes the data about alcohol consumption in Pennsylvania is misleading because it’s based on state liquor store sales. As a result, Pennsylvanians who cross state borders to buy wine and liquor aren’t reflected in the data.
If Pennsylvania were to make reforms to get more of those people to buy their booze in this state, the state could get as much as $200 million a year in new tax revenue just from wine sales, McCorkle said.
Not everyone buys his theory though.
Wendell Young, president of Local 1776 of the United Food and Commercial Workers Union, which represents about 3,600 state liquor system workers, said there’s no question that there is some border bleed. But, he said a lot of that comes from people going to Delaware where there is no sales tax or Maryland where the tax is extremely low.
On the other hand, people from New Jersey cross the border to buy wine and spirits in Pennsylvania state stores, he said.
Young said that if the system is dismantled, there will be financial costs associated with laying off workers, plus societal costs. He pointed to a 2011 study commissioned by the Centers for Disease Control that issued a recommendation that states refrain from privatizing their liquor systems because it leads to more drinking.
Moving more of the sale of wine into private hands will mean the state will get less revenue from those sales, he said.
“Flooding the market with cheap licenses and letting the retailers keep the profit” may be good for the grocery store chains, he said. “That doesn’t mean it’s good for Pennsylvania.”